Microfinance expands in 2016 — in defiance of dwindling number of market players
Total microloans extended in 2016 rose 39.4% to 195.1 billion rubles, while the number of active borrowers, as of late 2016, was up 54.9% to reach 5.1 million, according to the 2016 Review of Key Microfinance Organisation Indicators, available on the Bank of Russia website. There were 67.9% (19.0 million) more loan agreements executed in 2016 than in the previous year. Microlending gained momentum in the second half of 2016, when 56.3% of the year's aggregate agreements were made, to a total of 54.1% of the annual amount. Loan principal by the end of 2016 totalled 88.1 billion rubles (+25.3%). The number of authorised MFOs (microfinance organisations entered into the State Register) was down by 29.8% (1,100 companies). In this way, the decrease in the number of market players made little, if any, effect on overall segment development.
One year prior, MFOs saw a more modest contraction of 12%, or 512 companies. The reduction in the number of organisations comes as a result of the Bank of Russia’ s drive to force unscrupulous market players out of the market. These efforts resulted in as many as 1,169 organisations having been struck off the Register following multiple legal violations (with the fourth quarter accounting for over 50%); a further 545 organisations exited the market voluntarily. There were 696 new entrants to the market in the year.
An individual’s average microloan for 2016 decreased to 9 thousand rubles (from 10.4 thousand rubles), while the average amount of short-term microloans (including those issued online) went down by 0.2 thousand rubles to reach 6.4 thousand rubles compared to the same period. The average amount of a legal entity's loan grew to 700.1 thousand rubles (+167 thousand rubles).
The effective interest rate on microloans with one month’s maturity for up to 30 thousand rubles declined in 2016 Q4 over the same period the previous year by 5.8 pp to 599.4% per annum. Compared to 2014 Q4, the decline was 51.9 pp.
Total microloans intended for business development amounted to 24.1 billion rubles in 2016, a 7.8% rise on the previous year.